Which type of loan requires the borrower to meet certain criteria set by the government?

Which type of loan requires the borrower to meet certain criteria set by the government?

• A. Conventional Loan
• B. Government Loan
• C. Private Loan
• D. Subprime Loan

Answer: (B)

A government loan is specifically designed to assist certain borrowers by providing favorable terms and conditions that meet predefined criteria set by governmental bodies. Examples of government loans include FHA (Federal Housing Administration), VA (Veterans Affairs), and USDA (United States Department of Agriculture) loans. These loans often cater to specific demographics, such as first-time homebuyers, veterans, or individuals in rural areas, and they tend to have more lenient credit score and down payment requirements than conventional loans. Borrowers seeking these loans must meet eligibility criteria related to income, creditworthiness, and other factors that align with the intentions of the government programs aimed at promoting homeownership among specific populations. This obligation to meet criteria is what distinguishes government loans from other types of loans, which may not have such strict requirements. Consequently, a government loan is defined by its linkage to federal guidelines and the benefits it aims to provide to targeted groups.

A government loan is specifically designed to assist certain borrowers by providing favorable terms and conditions that meet predefined criteria set by governmental bodies. Examples of government loans include FHA (Federal Housing Administration), VA (Veterans Affairs), and USDA (United States Department of Agriculture) loans. These loans often cater to specific demographics, such as first-time homebuyers, veterans, or individuals in rural areas, and they tend to have more lenient credit score and down payment requirements than conventional loans.

Borrowers seeking these loans must meet eligibility criteria related to income, creditworthiness, and other factors that align with the intentions of the government programs aimed at promoting homeownership among specific populations. This obligation to meet criteria is what distinguishes government loans from other types of loans, which may not have such strict requirements. Consequently, a government loan is defined by its linkage to federal guidelines and the benefits it aims to provide to targeted groups.